A. LEGISLATION AND RULES
A.1 Legislation
International arbitration in South Africa remains under the jurisdiction of the International Arbitration Act, 15 of 2017 (IAA), which integrates the UNCITRAL Model Law. Domestic arbitrations are regulated by the Arbitration Act, 42 of 1965 (“Arbitration Act“), which is yet to be modernized despite persistent calls for reform.
A.2 Institutions, rules and infrastructure
The Arbitration Foundation of Southern Africa (AFSA), the region’s leading arbitration institution, has strengthened its position in international dispute resolution through several key developments in 2024.
AFSA will play a central role in the new BRICS dispute resolution framework, following agreements at the Eighth BRICS Legal Forum in Johannesburg (8-9 December 2023). The Federal Council of the Brazilian Bar Association, Association of Lawyers of Russia, Bar Association of India, China Law Society, and Law Society of South Africa will develop this framework using modified AFSA Rules, with final adoption scheduled at the next forum in Russia. This development consolidates AFSA’s role as South Africa’s BRICS arbitration center and advances its second edition of Perspectives publication, which analyses shared dispute resolution mechanisms for BRICS member states.
The International Federation of Commercial Arbitration Institutions (IFCAI) has admitted AFSA as a full member, connecting it to leading arbitration centers worldwide. This membership enables AFSA to contribute to global best practices and advance commercial arbitration excellence internationally.
AFSA has also expanded its Asian partnerships through its China-Africa Joint Arbitration Centre (CAJAC). This specialized institution, established to resolve trade and investment disputes between Chinese and African parties, has signed new agreements with the Suzhou Arbitration Commission. A high-level delegation from China’s Jiangsu Province initiated this collaboration to streamline dispute resolution between Chinese enterprises and South Africa.
The inaugural Johannesburg Arbitration Week (JAW) held in April 2024 drew 500 delegates from local, African, and international sectors to address pressing developments in commercial dispute resolution in the region. The event marked a watershed moment for regional arbitration with 11 South African Development Community (SADC) member states signing the AFSA-SADC Alliance Charter. Angola, Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, Tanzania, Zambia, and Zimbabwe joined AFSA in creating a unified arbitration framework. The AFSA-SADC Alliance Charter establishes a network committed to excellence in private dispute resolution, harmonizing arbitration practices across Southern Africa. It aims to develop fair and reliable dispute resolution systems, build panels of mediators and arbitrators, and promote reform of domestic arbitration laws to align with international standards. The Legal Practice Council of South Africa has endorsed this charter as a paradigm shift for the region’s legal profession.
AFSA and the South African Restructuring and Insolvency Practitioners Association (SARIPA) have launched a specialized Business Rescue Division to address market needs. This division provides expedited dispute resolution for companies in financial distress, with a Management Committee of retired judges, attorneys, and experienced practitioners overseeing the system’s integrity.
Further expanding its international reach, AFSA has partnered with the Indonesian Dispute Board to share knowledge and conduct collaborative research, strengthening arbitration practices across both regions.
B. CASES
B.1 Minister of International Relations and Co-operation NO and Another v. Neo Thando/Elliot Mobility (Pty) Ltd and Another:[1]
In the case of the Minister of International Relations and Co-operation NO and Another v. Neo Thando/Elliot Mobility (Pty) Ltd and Another, the Supreme Court of Appeal (SCA) of South Africa addressed whether an arbitrator had jurisdiction to arbitrate a dispute referred unilaterally by Neo Thando without the consent of the Department of International Relations and Co-operation (DIRCO). The SCA ultimately held that the arbitrator lacked jurisdiction due to the absence of mutual agreement to arbitrate, as required by the Service Level Agreement (SLA) between the parties. This decision overturned the High Court’s ruling, which had affirmed the arbitrator’s jurisdiction.
The underlying dispute emerged from a government tender for relocating officials’ household goods. Neo Thando secured the tender and executed a SLA with DIRCO. Complications arose when AGS Frasers, DIRCO’s existing service provider, refused to transfer goods, creating an operational impasse. Neo Thando responded by unilaterally initiating arbitration and demanding damages, which DIRCO explicitly rejected.
The SCA systematically dismantled the arbitration’s validity through three fundamental legal principles. First, the court emphasized that arbitration requires explicit, mutual agreement, which the SLA unambiguously stipulated. Neo Thando’s attempt to force arbitration without DIRCO’s consent fundamentally contravened this requirement. Second, the court found that no substantive dispute existed at the time of referral, noting that Neo Thando’s damage demand letter failed to articulate a specific, justiciable controversy. Third, the court highlighted Neo Thando’s procedural non-compliance with both the SLA and the Arbitration Act.
The judgment reinforces the voluntary nature of arbitration, establishing that parties cannot be compelled into dispute resolution without consensual engagement. By rejecting the arbitrary initiation of arbitration, the court upheld the principle that dispute resolution mechanisms must be pursued through mutually agreed channels.
Practitioners should extract critical guidance from this decision. Contractual dispute resolution clauses demand precise drafting, with explicit consent mechanisms. Parties must meticulously follow procedural requirements and recognize that unilateral action may invalidate dispute resolution efforts.
B.2 IDS Industry Service and Plant Construction South Africa (Pty) Ltd v. Industrius D.O.O.:[2]
In the case of IDS Industry Service and Plant Construction South Africa (Pty) Ltd v. Industrius D.O.O., the High Court of South Africa, Gauteng Division, Johannesburg, addressed the enforcement of an international arbitration award under the IAA. The court dismissed IDS’s appeal with costs and upheld the enforcement of the arbitration award in favor of Industrius.
IDS, a South African company, and Industrius, a Croatian company, were involved in a dispute over services provided by Industrius for the Medupi and Kusile Eskom Power Station Projects in South Africa. The arbitration, conducted under the Rules for the Conduct of Arbitrations of the Association of Arbitrators (Southern Africa) 2013, resulted in an award requiring IDS to pay EUR 2,775,853.08 along with interest and costs. The court dismissed IDS’s counterclaim for EUR 20,834,137.87.
IDS failed to pay the awarded amount, prompting Industrius to seek enforcement in the South African courts. IDS opposed the enforcement and counter-applied for a stay pending the outcome of an action it had instituted against Industrius. The High Court granted the enforcement application and dismissed IDS’s counter-application. IDS then appealed, not challenging the award itself but the refusal to stay the enforcement.
The court emphasized that the IAA and the UNCITRAL Model Law provide a framework for enforcing international arbitration awards. IDS did not allege any grounds for refusal under article 36 of the UNCITRAL Model Law. The court found that IDS’s action was essentially a re-litigation of the same issues decided in the arbitration, applying the principle of res judicata. IDS’s alternative claims based on unjust enrichment were also barred by the arbitration agreement.
The court highlighted the importance of a “pro-enforcement bias” in international arbitration to promote certainty and efficiency in commercial transactions. Delaying enforcement would cause injustice to Industrius and undermine the finality of the arbitration process. In conclusion, the court dismissed IDS’s appeal and upheld the enforcement of the arbitration award. This decision underscores the importance of adhering to arbitration agreements and the principles of finality and res judicata in arbitration. It highlights the challenges of re-litigating issues decided in arbitration and the need for parties to address all potential claims within the arbitration process. The case serves as a reminder that courts are likely to enforce international arbitration awards and that attempts to delay or avoid enforcement may be unsuccessful.
[1] Minister of International Relations and Co-operation NO and Another v. Neo Thando/Elliot Mobility (Pty) Ltd and Another [2025] 1 All SA 31 (SCA).
[2] IDS Industry Service and Plant Construction South Africa (Pty) Ltd v. Industrius D.O.O. [2023] ZAGPJHC 637.
